The Federal Housing Administration (FHA) increased the Home Equity Conversion Mortgage (HECM) loan limits to $1,089,300 in 2023. This substantial increase—up from $970,800 in 2022—marks the first time in history that reverse mortgage limits surpass $1 million.
This substantial increase reflects steep surges in home prices across America, Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said in a press release.
Reverse Mortgage Lending Limits for 2023
Reverse mortgage lending limits are updated annually to account for changes in the housing market and average home prices. In 2023, the HECM maximum nationwide claim amount that reverse mortgage companies can offer is $1,089,300 for all single-family mortgages assigned from January 1, 2023, through December 31, 2023.
Many markets have experienced unprecedented home price appreciation in recent years, which has forced the FHA to increase the mortgage lending limits by 18% in 2022 and again by 12% in 2023—and home appreciation hikes show no signs of slowing. This gives senior homeowners with high-value homes significant borrowing power.
Your applicable Conforming Loan Limit (CLL) will vary based on your property size and local median home values.
| Property Size | Low-Cost Area “Floor” | High-Cost Area “Ceiling” | AK, HI, Guam, U.S.V.I. “Ceiling” |
|---|---|---|---|
| One-Unit | $472,030 | $1,089,300 | $1,633,950 |
| Two-Units | $604,400 | $1,394,775 | $2,092,150 |
| Three-Units | $730,525 | $1,685,850 | $2,528,775 |
| Four-Units | $907,900 | $2,095,200 | $3,142,800 |
History of Reverse Mortgage Loan Lending Limits
Before 2008, the government calculated lending limits for reverse mortgages regionally. Today, the Housing and Economic Recovery Act (HERA) mandates that the FHA adjust the national lending limit. They do so annually.
- 2019 limit: $726,525
- 2020 limit: $756,600
- 2021 limit: $822,375
- 2022 limit: $970,800
The government authorizes limit increases to help borrowers keep up with spikes in home values like those that we have seen in recent years. The Federal Reserve Bank of St. Louis says that the median sales price of houses in the U.S. reached $454,900 in Q3 2022, up $21,800 in January 2022, just two quarters prior.
How Loan Limits Work
HUD’s reverse mortgage lending limit is basically the cap on how much one can borrow against his or her home. Loan limits can go up or down based on average home prices. Loan amounts depend on:
- The home value
- The interest rate
- The age of the youngest borrower
If your home is valued above the lending limit, you might consider getting a private reverse mortgage with higher loan limits than HUD designates.
Calculating Loan Limits: Low Floors and High Ceilings
The FHA sets several annual loan lending limits for homes it will insure. Their calculation is complex, but it essentially boils down to the county where you live and the type of property you own. Low-cost areas of the country have a lower limit, known as the “floor,” and high-cost areas have a higher limit, known as the “ceiling.”
The FHA establishes its floor and ceiling loan limits based on a percentage of the national conforming loan limit set by the Federal Housing Finance Agency (FHFA). See the table above for a breakdown of the national loan limits based on location and property type.
How Much Can You Borrow?
Traditional HECMs are backed by HUD and have tighter limits on how much you can borrow ($1,089,300 in 2023). Jumbo reverse mortgages allow older homeowners of high-value homes to borrow up to $4 million of their equity in their property.
| HECM Reverse Mortgage | Jumbo Reverse Mortgage |
|---|---|
| Borrower minimum age: 62 | Borrower minimum age: 55 |
| Max lending limit: $1,089,300 | Max lending limit: $4,000,000 |
Jumbo loans aren’t government-regulated like HECMs, which means they can leverage higher borrowing limits. This also means they have fewer protections. Many jumbo reverse mortgages are held by homeowners in California or New York, where home values tend to be higher than the national average.
Bottom Line
Reverse mortgage lending limits are adjusted annually based on property size and local median home values. The government regulates HECM reverse mortgages, but not jumbo reverse mortgages. This results in higher lending limits, which can help senior homeowners with high-value homes qualify for a loan. To determine your lending limit, contact a reverse mortgage company near you.